1 'US stimulus cut rocking emerging markets' (Larry Elliott in The Guardian)
India's central bank governor has blamed the US and other western nations for
the financial tremors shaking emerging markets as he attacked the way the US
was withdrawing its colossal stimulus programme. Important emerging economies –
including India, Turkey and South Africa – have all raised interest rates to
defend their currencies this week amid signs that the gradual phasing out of
quantitative easing has led to investors becoming more jittery about
high-yielding, risky markets.
The Fed announced on Wednesday that the US economy was strong enough for it to reduce monthly asset purchases from $75bn to $65bn and news that the economy grew at an annual rate of 3.2% in the final three months of 2013 left Wall Street convinced that further tapering was inevitable. "International monetary co-operation has broken down," Rajan, a former chief economist at the International Monetary Fund, said.
"Industrial countries have to play a part in restoring that [co-operation between central banks], and they can't at this point wash their hands off and say we'll do what we need to and you do the adjustment.
"Fortunately the IMF has stopped giving this as its mantra, but you hear from the industrial countries: We'll do what we have to do, the markets will adjust and you can decide what you want to do," he added. "We need better co-operation and unfortunately that's not been forthcoming so far."
Rob Carnell, economist at ING bank, said growth in the fourth quarter of 2013 would probably have been close to 3.5% at an annual rate had it not been for parts of the federal government being shut down in October. While inflationary pressure was weak, Carnell added: "This should not be enough to detract the Fed from what looks like will be another $10bn taper at their March meeting, taking monthly QE down to $55bn."
The Fed announced on Wednesday that the US economy was strong enough for it to reduce monthly asset purchases from $75bn to $65bn and news that the economy grew at an annual rate of 3.2% in the final three months of 2013 left Wall Street convinced that further tapering was inevitable. "International monetary co-operation has broken down," Rajan, a former chief economist at the International Monetary Fund, said.
"Industrial countries have to play a part in restoring that [co-operation between central banks], and they can't at this point wash their hands off and say we'll do what we need to and you do the adjustment.
"Fortunately the IMF has stopped giving this as its mantra, but you hear from the industrial countries: We'll do what we have to do, the markets will adjust and you can decide what you want to do," he added. "We need better co-operation and unfortunately that's not been forthcoming so far."
Rob Carnell, economist at ING bank, said growth in the fourth quarter of 2013 would probably have been close to 3.5% at an annual rate had it not been for parts of the federal government being shut down in October. While inflationary pressure was weak, Carnell added: "This should not be enough to detract the Fed from what looks like will be another $10bn taper at their March meeting, taking monthly QE down to $55bn."
http://www.theguardian.com/business/2014/jan/30/us-stimulus-emerging-markets-raghuram-rajan-india
2 Mobile is challenge area for Google (Claire Cain
Miller in The New York Times) There is no denying that Google has become a
mobile company. Now, Google — along with shareholders, industry partners and
advertisers — is trying to figure out what that means. In mobile advertising,
Google is wrestling with how to make as much money on phones as it has on the
ads that appear on desktop computers. Its fourth-quarter earnings report on
Thursday showed that it is continuing to struggle with lower ad prices on
phones.
But in
other areas, like manufacturing smartphones, Google has decided that the
business is better left to someone else. It has announced that it would sell
Motorola Mobility, which it bought less than two years ago for $12.5 billion,
to Lenovo for $2.91 billion. Google executives would prefer that people stop
talking about mobile at all.
“People aren’t distinguishing what they’re doing on
different screens, so advertisers should be more agnostic about where they
reach the user,” Nikesh Arora, Google’s chief business officer, said on a
conference call with analysts. “The fundamental tenet is not to speak about
mobile, mobile, mobile. It’s really about living with the users. What device
are you on? What’s your question? How can we assist you? That’s a much broader
and richer set of activities for us.”
And while everyone else is still obsessing about
smartphones, Google has moved on to new kinds of devices and even robots.
Eyewear with tiny computers called Google Glass is expected to be sold to
consumers this year, and the company recently bought robotics companies and
agreed to acquire Nest Labs, which makes Internet-connected thermostats and
smoke detectors.
The company reported fourth-quarter revenue of $16.86
billion, an increase of 17 percent over the year-ago quarter. Net revenue,
which excludes payments to the company’s advertising partners, was $13.55
billion, up from $11.34 billion. The fourth quarter is generally Google’s
strongest because it makes money from retail advertisers during the holiday
shopping season. Despite Google’s mobile challenges, among web businesses it might
be the biggest beneficiary so far of consumers’ shift to mobile devices. Google
services are the top web property on smartphones, reaching 87 percent of the
mobile audience. Facebook is next with 85 percent.
http://www.nytimes.com/2014/01/31/technology/revenue-and-profit-rise-at-google-but-mobile-struggles-continue.html?_r=1
3 Generation Lost (Khaleej Times) When billionaire
bankers and CEOs of global corporates, meeting at an exclusive Swiss ski
resort, talk of social inequality and rising unemployment, issues that are
usually debated by activists of nonprofits, then surely there must be something
seriously wrong with the global economy. This year’s annual World
Economic Forum meet at Davos in Switzerland was different because the focus was
not just on the usual metrics — GDP growth, interest rates, global FDI inflows,
EBITDA and other esoteric acronyms — but on issues that affect millions of
young people across the globe.
The WEF,
in its annual survey of 700 opinion-makers, has identified income disparity as
the most likely risk to cause an impact on a global scale over the next decade.
Other risks of significant concern include extreme weather events, unemployment
and fiscal crises. Millions of young people, especially those below 25, in
Europe, the US and other developed nations are now part of what is described as
‘generation lost.’ While central banks including the US Federal Reserve have
injected trillions of dollars into the global financial system, these have only
resulted in skyrocketing stock prices and soaring wealth for billionaires.
The
unemployment rate in the US, for those below 25, is as high as 15 per cent.
While unemployment in the Eurozone is at a record high of 12 per cent, for
those below 25 the rate is more than double. The International Labour
Organisation warned recently that the global youth-to-adult unemployment ratio
had touched a historical peak; while the global adult unemployment rate was 4.6
per cent, the rate for those between 15 and 24 was 13.1 per cent. While 202
million people were unemployed around the world, those below 25 accounted for
nearly 75 million.
http://khaleejtimes.com/kt-article-display-1.asp?xfile=/data/editorial/2014/January/editorial_January62.xml§ion=editorial
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